Japan: A Projects & Energy: Domestic Overview
Japan’s Seventh Strategic Energy Plan and the Evolving Renewable Energy Framework
Japan’s Seventh Strategic Energy Plan (SSEP), approved by the Cabinet on 18 February 2025, provides a comprehensive policy framework for the country’s energy system toward fiscal year 2040. The plan reflects a structural increase in electricity demand driven by the expansion of artificial intelligence, digital infrastructure, and large-scale data centres. Total electricity generation is projected to reach approximately 1.1–1.2 trillion kWh by 2040, a significant increase from 985.4 billion kWh in fiscal year 2023. Against this backdrop, the SSEP positions renewable energy as a core pillar of Japan’s long-term energy security, decarbonisation, and industrial policy.
Under the SSEP, renewable energy is expected to supply 40–50% of total electricity generation by 2040. Nuclear power is projected to account for approximately 20%, while thermal power is expected to represent around 30–40%. Within the renewable energy mix, solar photovoltaic (PV) power remains the mainstay, accounting for an estimated 23–29% of total generation. Other renewable sources include hydropower at 8–10%, biomass at 5–6%, wind power at 4–8%, and geothermal power at 1–2%. These projections indicate both Japan’s continued reliance on solar PV and its intention to diversify renewable sources in order to enhance system stability.
Challenges in Renewable Energy Deployment and Policy Measures
The SSEP mentions several challenges associated with large-scale renewable energy deployment that have arisen, including coexistence with local communities, the financial burden on the public, output fluctuations inherent in variable renewable energy sources, the need to accelerate innovation and domestic supply chain development, and the establishment of effective systems for the disposal and recycling of used solar panels. These challenges have become increasingly prominent as renewable penetration rises and projects expand geographically.
To address these issues, the government proposes a range of policy measures. These include strengthening business discipline among renewable energy operators, expanding the use of the feed-in premium (FIP) system and competitive bidding mechanisms, enhancing inter-regional transmission capacity, promoting battery storage, and developing robust waste management and recycling frameworks. Further, the SSEP emphasises targeted expansion of renewable generation capacity through specific technologies and development models, such as perovskite solar cells with a target capacity of 20 GW by 2040, floating offshore wind power in exclusive economic zones (EEZs), geothermal development supported by national drilling surveys and streamlined permitting, accelerated deployment of next-generation geothermal technologies, and the promotion of small-scale hydropower projects led by local governments.
Transition from FIT to FIP and Community Engagement Requirements
Japan’s renewable energy support framework has traditionally relied on the feed-in tariff (FIT) system under the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources. While the FIT system contributed significantly to the rapid expansion of renewable energy by providing revenue certainty, policy emphasis has gradually shifted toward the FIP system. Under the FIP system, renewable generators sell electricity into the wholesale market and receive a premium, thereby increasing market integration and encouraging greater responsiveness to price signals.
Amendments to the Act, effective from 1 April 2024, strengthened requirements for briefing sessions and prior notification measures for residents living near proposed renewable generation facilities. Operators are required to engage with local communities at least three months prior to applying for FIT or FIP certification, and similar obligations apply when material changes to certified projects are planned. In practice, non-compliance with procedural requirements has resulted in repeated briefing sessions, causing delays and increasing transaction costs, particularly in project development and secondary market transactions involving FIT/FIP-certified assets. In response, revisions to the resident briefing system are being considered, including procedural simplification in areas without nearby residents.
Solar Photovoltaic Power: Consolidation and Long-Term Stability, Tightening of Regulations
Solar PV generation in Japan is characterised by a highly dispersed project structure, raising concerns regarding long-term operational stability, safety management, and end-of-life disposal. In response, a “long-term stable qualified solar photovoltaic power business operator” system was introduced under amended regulations effective from 1 April 2025. Under this framework, the government certifies operators capable of conducting solar PV projects on a stable and long-term basis.
Certification criteria include compliance with relevant laws and regulations, possession of sufficient technical and managerial capabilities, the establishment of long-term operational targets, and the absence of prior administrative sanctions under the FIT/FIP system. Investment participation by a listed corporation or a local public body is required, a condition that is expected to limit certification to a relatively small group of operators.
Qualified business operators benefit from regulatory streamlining, including simplified resident notification procedures for certification changes, the ability to adopt integrated safety management systems across multiple power plants, greater flexibility in the accumulation of disposal cost reserves when expanding facilities, and preferential access to information on secondary market transactions involving renewable energy projects.
Conversely, in response to the increasing number of inappropriate cases arising from rapid expansion of solar photovoltaic power causing issues such as coexistence with local communities, the national government confirmed the following policies at a meeting of relevant ministers on 23 December 2025: expand the scope of projects requiring environmental impact assessments from the perspective of natural environment protection; strengthen the review process; tighten safety regulations under the Electricity Business Act from the perspective of maintaining security; revise the operational guidelines for the Landscape Act concerning landscape planning from the perspective of landscape protection; and the drafting, publication, etc, of a manual for utilising the Landscape Act. Going forward, revisions to the necessary laws and regulations based on these policies are expected to proceed.
Offshore Wind Power and Institutional Reform
Offshore wind power occupies a central position in Japan’s future renewable energy strategy. Under the Act on Promoting Utilisation of Sea Areas for Renewable Energy Generation, the national government designates Promotion Areas and selects power generation operators through public tenders, granting sea area occupancy rights for up to 30 years. Public tender occupation plans are evaluated based on supply price and overall project feasibility, including implementation capability and contributions to local communities and regional economies.
In response to cost inflation, supply chain disruption, and project delays observed in global offshore wind markets, the government is reviewing the public tender occupation guidelines. Key reform directions under consideration include moderating the steep price-based scoring structure associated with zero-premium bids, strengthening evaluation of risk management and financial resilience, introducing more flexible approaches to delays through revised security deposit mechanisms, and allowing limited price adjustment mechanisms linked to inflation indicators. Additional institutional reforms being examined include limited participation of zero-premium offshore wind projects in the capacity market, centralisation of preliminary surveys through public entities, expansion of the legal framework to offshore wind development in EEZs, and the introduction of disposal cost reserve systems for onshore wind power generation.